Living Trust is a legal instrument or policy made during a person's lifetime that entrusts the management of that person's assets (funds, bank accounts, real estate, automobiles, and valuable personal property) to a nominated person called the “Trustee,” for the benefit of the ultimate beneficiary.
A living trust, as opposed to a will, may typically convey treasures to beneficiaries faster and with less fuss. This trust keeps one’s assets safe during their entire life and distributes them to the individuals they designate after the demise.
Types of Living Trust
Irrevocable and revocable living trusts are two readily accessible ones to choose from -
- Revocable (Permits the trust settler to title himself or herself as trustee who can seize control of the trust's resources later on - the properties under the trust, however, stay part of the trust settlor's estate, which means the person may still be responsible for taxation)
- Irrevocable (The settlor of the trust forfeits some control powers over the trust. The trustee essentially becomes the legitimate owner, but the person's property tax is reduced)
For example, considering a trust as a bag, it can hold all of the resources, including monetary accounts and real properties. One can have the authority over the box for the owner’s lifetime, and the original owner can use, sell, or spend the contents till death and not worry about the peaceful handover of his/her assets to the rightful beneficiary upon their death.
Use of the Term in Sentences
- Living trust benefits the grantor financially as it reduces property tax.
- One of the major advantages of a living trust is the opportunity to avoid the courts and maintain confidentiality.